Money Making Reports
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INTRODUCTION
While many aspects of mail order are commonly understood by those who have alreday
learned the hard wya--by costly experience, years of trail and error--there are several
facets of mail marketing that remain cloaked in mystery, clouded by half-truths,
misinterpretation and misinformation among those who0 have not yet had the advantages of
such experience.
This report will attempt to clear away some of the fog and reveal mail order the way
it is in the real world, not as some crafty promotor would have you believe it is.
We will cover a wide territory in just a few concise pages, and present both pros and
cons of various mail marketing ideas, methods and pratices within the large sco-e of
selling by mail. Many books on the subject, some consisting of hundreds of pages do not
include the informatioon you will find here.
CAPITAL INVESTMENT
You've probably seen the ads:
"Start your own mail order business with just
$10 and make thousands of dollars at home in
your spare time"
You don't really believe ads like that, do you? of course not. You're much too
intelligent to fall for such misleading promises, but there are many people who are not as
smart as you, and it's to this audience these ads are directed.
some shrewd promoters of mail order plans, schemes and other questionable programs
prey upon the gullibility of the public. They appeal to humanity's inherent greed...the
dream of making a fortune without investment, risk or effort.
Just for the record, there still is no free lunch. The amount necessary to begin will
depend on what you hope to accomplish. If you plan to buy or rent a small building, stock
it with merchandise, hire a few employess, we're talking upwards of $50,000. To begin at
home in spare time, using a spare room and operate as a sole proprietorship or with the
help of family members, you can trim that figure by many thousands of dollars.
Before we get too specific about dollar amounts, let's pose a few questions:
- How much do you know about mail order? Do you have knowledge and experience in
advertising, graphic arts, printing, accounting, record keeping, taxes?
- Have you selected your product line, and have you determined who your prospective
customers will be? Do you know which publications to advertise in, what size ad to use,
which mailing lists to rent?
- Do you have a reliable supply source for what you will be selling, or will you be
your own supplier as manufacturer or publisher?
- If you must rely on an outside supplier, will you purchase products wholesale to
stock and ship your customers, or will you operate on the dropship method, having orders
shipped directly to your customers from supplier's stock?
Your answers to these questions will help in figuring your initial cost. For instance,
if your knowledge of mail order and the other related subjects consist of what you might
have read in a book about 10 years ago, you're not ready to begin. Plan to invest at least
$100 in a few mail order books, reports, subscriptions to a couple of mail order journals,
maybe even subscribe to a newsletter. Learn as much as you can about mail order selling,
now and on a continuing basis, because there are always new ideas, changes and innovations
that you must keep up with. Never think you know all there is to know.
Obviously, it will require more capital to produce whatever type of item you sell
than if you purchase ready-made products, and it will cost more to buy and stock what you
sell rather than doing business on a dropship basis.
We haven't established the selling price of the products in question, either
wholesale or retail, but it will require more capital to maintain an inventory of $50
items than if they are to sell for only $5 so this must be taken into consideration.
When purchasing inventory from an outside supplier, you can probably buy in dozen
quantities, but the picture changes if you produce your own product line. It would not be
practical to produce only a dozen of anything because the production costs would be
prohibitive. To enjoy the lowest possible production costs, you would be required to turn
out a minimum of a thousand at a time.
On a dropship basis, inventory costs would be zero. If purchasing items to stock
yourself, you should maintain an inventory of about $500. If you plan to manufacture,
publish or otherwise produce your own products, you should figure a minimum of $3,000.
The biggest chunk of your initial capital--and this is important, because most
newcomers don't realize this until it's too late--should be reserved for advertising and
promotion. So, if you invest $500 in products, plan to keep about $1500 for promotion.
This will include space ads, classified ads, mailing lists (if you opt to take the direct
mail route), circulars, brochures, sales letters and envelopes.
If you are operating on the dropship method, you should still plan to invest a
minimum of $500 in advertising to get your business off the ground.
As you can see, there is no exact answer to the capital question, but now you should
have a working estimate as to how much capital will be required, based on the direction
your are investment for your particular objectives.
ADVERTISING--THE GOOD, THE BAD AND THE UGLY
To the mail order newcomer, all advertising looks pretty much alike. Each ad
represents a person or company who is trying to sell you something or get you interested
in what they have to offer. You normally don't try to judge the sales copy, layout or
graphics. Either you buy, inquire or pass it by.
As you become an active advertiser, yourself, all ads begin to take on a new
perspective. You see ads interesting or boring; one will zoom out at you with sparkle and
zest, while another leaves you cold. All this analysis will be based on your own
experience in creating and placing advertising for whatever you are selling.
In the final analysis, however, personal opinion or judgement means nothing to the
success or failure of advertising. It's the results of each ad which determines its power
and effectiveness.
WHAT MAKES ADVERTISING SUCCESSFUL?
MANY INDIVIDUAL ELEMENTS COME INTO PLAY MAKING A SUCCESSFUL AD:
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PERSUASIVE SELLING COPY. The wording is the single most important element in
determining a successful ad. What counts most is what you say and how you say it.
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PLACEMENT IN APPROPRIATE PUBLICATION. This might seem obvious, but it is often
neglected. If the right people don't see your ad, they can't respond.
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SPACE/PRICE IN PROPORTION. You simply can't sell high priced merchandise from a small
classified or one inch ad space. These should be considered as a low cost means of
building a mailing list by asking readers to write for more information. If you expect to
sell directly from an ad, the size of the ad will have to increase in proportion to the
selling price. Two or three inches of space for items selling for 42 to $5... half or full
page for items selling for more than $5 up to $20. When the price goes above $20 it is
usually best to run inquiry ads and follow up with a printed sales presentation. There are
exceptions, but this is a fairly safe rule to follow.
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TESTING ALL THE ELEMENTS. Unlike institutional advertising (toothpaste, cars, soap,
etc.) which must rely on extensive market research, analysis, surveys and a lot of
psychology to achieve success, mail order selling has a built-in "watchdog" to guard
against waste and loss, and to help assure that every dollar spent will produce a
profit...or at least tell you why it didn't, so you won't make the same mistake twice.
This method (unique to mail order) is called KEYING. By inserting a number or letter (or
combination) into every ad you run, you can tell which ad works in which publication and
in which issues it works best. More sophisticated forms of this testing technique can be
carried thru by trying a new headline, a different testimonials, guarantees, etc. The
testing technique know no limits, but there is also danger in becoming test-happy. To use
the testing principle effectively, be certain that the results will justify the time and
expense of making the test. If it merely means adding to your p
aperwork without adding profit or reducing cost, it isn't worth it.
DROP SHIPPING
Theoretically, you can offer a million dollars worth of merchandise by mail without
ever buying or stocking a single item. The trick to this is by using the drop ship method
of selling. Simply stated, this means that you merely do the advertising, receive orders
at your address, then forward the orders to your suppliers with your wholesale price and
they send the item to your customer. It's an easy way to sell, it's effective and it works
for many mail order firms, large and small. But, like so many other things in this
business, there are two sides to the story. If you have already heard about drop shipping,
you have probably only heard one side...the side that merchandise promoters want you to
know. As Paul Harvey might say, "Now you will hear the REST of the story."
Yes, drop shipping can be used profitably, but it is unlikely that you or anyone else
can become wealthy in mail order this way. The reason is economic. Most manufacturers,
wholesalers or suppliers offer drop ship discounts of 30%-40% and up to 50% to dealers.
This is not enough to allow any great profit on which to build a business. The selling
costs will usually outweigh the profit allowed on merchandise, so the more you sell, the
more you lose. How then can you make money by using the drop shipping principle? By using
it to get REPEAT business.
Here's how it would work:
Select what you think would be a good "leader" item and ask your supplier for his
lowest price in quantities. The low price will give you greater flexibility in promoting
it. The important rule here is to make sure this item represents the entire line of
merchandise that you want to sell. Whether you sell it directly from an ad, run inquiry
ads and use the two-step followup method of selling, or rent a mailing list...you will
probably lose money on this first sale. Don't worry about it. If it's a good item at the
right price, you will be building a customer base... people who will be happy with their
purchase and will be willing to do business with you again.
Now is the time to use the drop ship method. From your original supplier or from
others, get all the sales literature available on other good products that will appeal to
your customers. Use this literature as individual sales pieces, or compile them into your
own catalog. When filing your first order, enclose this catalog or sales literature with
the order, along with an order from and your return address envelope. A percentage of
customers will begin sending you additional orders for these new items. Here's an
important point: To get the first order you had to spend a lot of money for merchandise,
first order you to spend a lot of money for the merchandise, the advertising and shipping.
This time you don't have these expenses. All subsequent orders are virtually FREE, except
for the cost of the sales literature (possibly 2 cents to 10 cents each.)
At least 3 or 4 times a year, mail to your accumulating customer list with additional
offers. All of these can now be drop shipped at a profit. Keep a close watch on items that
are hot...those that sell exceptionally well. You might want to take advantage of the
lower prices by stocking some of these to fill your own orders and enjoy the maximum
profits from each sale.
This is how drop shipping can and should be employed. Of course, if you already
manufacture or publish a product of your own, you're way ahead of the game. Use drop
shipping to supplement your sales by offering other items to your customers on a regular
basis. This is where the profits are in drop shipping.
THE ILLUSION OF PRINT/MAIL SERVICES
IF ever there was a lazy way to easy profits in mail order it has to be the concept
of letting someone else do all the work for you.
In theory, it works like this:
You send a camera-ready circular or ad to someone who advertises a print/mail service
and they will print and mail it (along with many others) to 1,000 to 25,000 names on their
own list. You simply pay a one-time charge while they do all the work. Now, multiply this
by 5, 10 or more such services and you could (still theoretically speaking, of course)
have several thousand of your offers in the hands of prospective buyers within a few
weeks.
The problem, is that it doesn't work that easily, at least not to the point of making
it profitable for the dealer who expects to become delunged with orders. Even the very
best mailers in the business can produce only a small percentage of return for their
clients, so you would have to have a very high markup on your offer and reach millions of
people if you hope to make it profitable. If you already have a test-proven offer that
produces about 3% return when you mail the offer by itself, you will be lucky to get
one-half of 1% when mailed by a mailer along with hundreds of others.
Yes, some offers can produce a profit, even with such a small percentage of return,
but they are extremely few and far between. First of all, you would most likely have to be
the high markup that is required. If the offer calls for $10 and you can produce it for 41
really is: That's 5 orders per thousand...50 orders per 10,000. Some offers might be able
to survive on this, others cannot. You will have to do some figuring to determine whether
it's worth trying.
On the down side of this practice, there has been quite a bit of speculation about
such print/mail services as to their honesty and quality of their services. Many of them
offer less than good printing, often smudgy or in various shades of gray instead of crisp
black and white; some of the lists they use are so overworked, they have become virtually
worthless. Even the best mailers use primarily "Opportunity" lists, so merchandise offers
would hardly be appropriate. Another flaw in this idea that some crooked mailers are out
there who simply don't mail the quantity they claim. It seems they print and mail only
hundred or so, but claim to mail in the thousands. This is very difficult for anyone to
prove or disapprove, so the entire idea of using a print/mail service is precarious at
best.
CHAIN LETTERS
It should hardly be necessary to include this mail order scam, but such letters
continue flooding the mail every day. Chain letters are a total waste of time and money,
appealing to the gullible and greedy, looking for fast, easy money. The easiest way to
spot a chain letter is when you see a group of 4 or 5 names and you are asked to delete
one and add your own, then send a specific amount of money. Chain letters are a sore spot
on the business of selling by mail, and they are illegal. If it even looks like a chain
letter, it probably is. Save your money and stay out of trouble. When you receive chain
letters in your mail, trow it away...fast. Better yet, turn them over to your local
Postmaster.
ESTABLISHING AN IN-HOUSE AD AGENCY
There have been several ads promoting books and reports on this subject, or included
as part of the contents in several mail order books stating:
"SAVE UP TO 17% ON ALL YOUR ADVERTISING"
It's legitimate, practical and effective, but like so many other promises, there are
pros and cons involved. The pros are fairly obvious. By setting up your own advertising
agency and placing your advertising under your agency name, most magazines will allow you
the standard 15% agency commission plus and extra 2% cash discount. If your annual ad
budget is $5,000 this amounts to a saving of $850 a year, which is a considerable piece of
change.
The negative side to this operation involves the initial cost of establishing your
new agency, which isn't very difficult, but it might be considered time-consuming. To
initiate an agency you will have to have a name for it other than your regular business
name. Example: If your company name is Nationwide Electronics and your name is John Smith,
you could call your agency John Smith Advertising or The J.S. Advertising Agency, The
agency address will have to be different than your company's, but this can be resolved by
renting a post office box one of them and using your home or office address for the other.
Next you will have to open a separate checking account under the agency name because all
advertising payments will be issued thru your agency, and you will probably be required to
register your agency with your County Clerk as a new business.
Once these details have been taken care of, you're ready to begin placing ads. You'll
have to have insertion order forms printed with your agency name and address, and a
separate form must be prepared for each ad in each publication. When your advertising
schedule involves only a few publications, this will not be a problem, but if you expand
into 50 to 100 different magazines, it can really cut into your time. Of course, if
business gets large enough, you can always hire a secretary to take care of that
chore.
THE LURE OF CLASSIFIED ADVERTISING
The easiest, least costly and potentially most profitable entry into mail order
advertising is thru the classifieds...yet there is probably more money LOST in classified
advertising than in any other way, with the possible exception of direct mail. Why? Let's
take a closer look.
Display advertising, the classy, artsy ads in magazines and newspapers, are difficult
to create and expensive to place. The novice lacks the necessary talent, ability,
expertise and (usually) the capital needed to venture into this area of selling. It
requires a basic knowledge of advertising in general and mail marketing in particular,
plus some background in artistic composition, layout and ad writing. The cost of running
even the smallest display ad often runs $200 to $500 or more per insertion. The biggies,
those full pagers, usually run $2,000 to $10,000 or more. Needless to say, the average
newcomer isn't about to jump into such an investment on pure speculation.
So, the classified ad becomes very attractive, both in its ease of creation and the
cost of running it. Such an ad can be scribbed on a piece of paper and sent to publication
with payment in a matter of minutes, if necessary (although such a hasty move should be
avoided) without any creative design or artwork.
The problem with using classified ads that they are often expected to do more than
they were designed to do in the first place, and that's to build a prospect mailing list.
Instead, probably 95% of all first-time classified users will try to sell their wares
directly from the ad, and this is where they go wrong. With very few exceptions, every
classified ad should, in one way or another, say "SEND FOR MORE INFORMATION." It should
NOT say " Send $10 for this thingamabob"...yet many of them do.
Many authorities will tell you that you can ask for money in a classified up to $5
for certain offers, but this is misleading. Asking for money in any amount will
automatically cut response by up to 50% or more. When you're paying by the word, every
word must work hard for the money spent, and that means brevity is essential. But is also
means you can only tell, not sell in the ad. By merely whetting a reader's appetite for
more information, then sending the complete story in a well-prepared sales package, a
classified ad can be used profitably to build a business.
If you don't ask a classified ad to do more than it was intended to do, you'll never
be disappointed.
WEALTH FROM REPEAT BUSINESS
Most newcomers to mail order think in terms of finding a single, new "hot" product to
sell...one which will capture the public's fancy and catapult them to fame and fortune.
This fancy is soon shattered after a few attempts at advertising the new pet product, only
to discover that sales are few and profits are even fewer, if any exist at all.
The secret in this case is that costs a considerable amount of money to secure each
new customer. Sometimes a modest profit can be realized from the first sale, but more
often a break even situation or small loss is the true outcome. This is the crucial
point...the stage where most beginners in mail marketing become confused, disillusioned
with the entire idea of mail order. It's at this point the faint of heart throw up their
hands in disgust, claiming that mail order is just another scam. The more stouthearted
(stubborn) dealer will try again with another idea, another ad, maybe a new selling
proposition, only to experience the same disappointment as the first time. The smart
person will begin to realize that it's vital to begin with at least TWO related items,
preferably five or more products, all appealing to the same type of buyer.
TO ILLUSTRATE THE POINT:
Suppose you place an ad for a $5 item at a cost of $100. To recoup the ad cost you'll
need 20 orders. Depending on fulfillment costs you'll also need an additional 5 or 10
orders to show profit. But suppose you receive only 10 orders? This means $50 LOSS each
time you run the ad. But wait: it also gives you 10 new customers. When filling the
original order enclose additional offers of a related nature. Assuming customers are happy
with the first purchase, about 10 to 20 % of them will order something else from you. It
have cost you &100 for the original ad, but the additional order will cost only a few
cents. This is where the profits come from.
Naturally, you hope you DON'T lose money on the initial ad. You would much prefer to
show a profit right up front, but this example was used to present the worst picture and
how it can be turned around. Keep in mind that, as long as your ad is running, you will be
building your customer list. At least two or three times a year, send these customers a
new offer. Satisfied customers will stay with you year after year, and this is where the
wealth is in mail order.
It's not in the advertising; it's in the customers.
PROFITS IN THE PRINTED WORD
A good line of information books and reports can be the most profitable items in mail
order. The field is enormous and the possible subjects are wide and diverse, as are the
individual markets for each subject: financial, home business ideas, health, home &
auto repair, investments, spare time money making ventures, do-it-yourselfers, mechanics,
electronics, collectors, etc.
One of the big secrets here, of course, is to decide exactly which market you want to
serve, then offer information only to these people. Don't try cross-selling by offering a
handy auto repair manual to someone who has expressed interest in better health or
attaining greater income. Equally as important is to offer useful information; new ideas
or uncommon information that isn't readily available elsewhere.
Next in important is the price/profit margin. Stay away from publishers who offer the
standard 40% discounts. You need a minimum of 50% if you plan to operate on a drop ship
basis, and 70% discount if you want to stock merchandise and fill your own orders. This
may not seem important to you now, but you will soon realize that you need the high
discounts to help offset the selling costs of whatever you are selling. Your selling costs
involve the original advertising placed in publications, printed sales literature and
postage needed to answer inquiries.
The next step toward success in the mail order information field is to use
advertising and sales material that are geared to the information you are offering.
Nothing sells itself by mail, it's in the words, ideas and graphics in the advertising
that will draw inquiries and sales.
How will you sell your information--
Through classified or display ads? By direct mail? with a combination of all methods?
Will you try to sell directly from a magazine ad, or ask for inquiries and use printed
follow up material to make the sale? These are questions that deserve careful
consideration before you go too far. If you are inexperienced in advertising or new to
mail order, you should enlist thee services of a competent mail order specialist to get
the answers to your questions.
When all the facts are in, are there really big secrets to selling by mail? Not
really!! There are only established principles of operation, proven ideas, methods and
techniques that work...others that have been proven unworkable and unprofitable. There are
no hard rules, just helpful guidelines. The true secret is to learn and follow the methods
that have proven to be successful, use whatever knowledge and skills that you can bring to
your new business, and get professional help in areas where you lack the ability to do it
on your own.
The mail order graveyard
is scattered with the
bones of those who didn't!
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